Sowing of corn in Kharif 2015 is likely to be lower

KOLKATA: Indian sowing of corn in Kharif 2015 is likely to be lower this year as global oversupply impacts domestic prices and exports, thereby impacting return on investment of growers. Global oversupply has led to higher ending stocks due to which international corn prices have fallen by around 27% since April 2014.

As per latest data from US Department of Agriculture, the ending stocks for 2014-15 trade year is estimated to rise 10.3% to 188.45 million metric tons (mmt) compared to 170.84 mmt at the end of last year. As per data, United States with rise of 15 mmt in ending stocks would contribute maximum to ending stocks globally.

Explaining the situation, Mr. Raju Choksi, Vice-President (Agri Commodities), Anil Nutrients Ltd., a part of Anil Group of Companies said, “Higher ending stocks is an area of concern for domestic as well as international markets. The falling prices will impact sowing in India as well as other major exporting countries like US, Brazil and Ukraine.”

Mr. Choksi informed that current firmness in the domestic prices of corn can be attributed to unseasonal rains in few growing regions of country that has delayed harvesting and thereby Rabi arrival of crop. “We expect prices to soften once Rabi crop arrivals start from next month. The global situation is likely to put pressure going forward on Kharif sowing as growers are likely to avoid sowing a crop, which is already in abundant supply,” Mr. Choksi said.

Since last few years, demand for corn as feed has risen in India as compared to demand for food, seed and industrial consumption. In fact since last four years, the ratio of feed consumption has crossed half way mark and remains at 55% for 2014, highest so far.

"The Indian market is following world market as far as consumption pattern is concerned. However, the ratio of feed consumption globally is higher at around 80% compared to 55% in India. We expect this trend to continue as growers shift to corn for feed following lower oilmeal production,” Mr. Choksi said.